37-291. Preferred rights to renewal of lease; exceptions; notification

A. Upon application to the state land department not less than thirty days nor more than one year before the expiration of a lease of state lands, the lessee, if a bona fide resident of the state or legally authorized to transact business in this state, shall have a preferred right to renewal, bearing even date with the expiration of the old lease, for a term not longer than ten years, as determined by the department, at a reappraised rental.

B. The preferred right of renewal shall not extend to a lessee who has not substantially complied with the terms of the lease or who has not placed the land to the use prescribed in the lease during its term or within the time prescribed, unless for good cause the failure to perform was given written authorization by the department. If the department determines the continued leasing of the land is not in the best interest of the state trust, the lease shall not be renewed.

C. Not later than ninety days before the expiration of a lease, the department shall:

1. Notify the lessee by mail of the pending expiration, enclosing an application to renew the lease.

2. Send a copy of the notice to any parties who have registered with the department as mortgagees or other lienholders of the lessee's interest by certified mail, return receipt requested.

D. If the existing lease is not renewed and the existing lessee is in substantial compliance with the terms of the lease and there is no new lessee or buyer for the land within ninety days after the lease termination, the commissioner must sign an agreement to reimburse the former lessee for the improvements on the lands as provided by section 37-322.01.